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As citizens of Zionsville, residents of the Royal Run subdivision have had little recourse against the Whitestown-owned water utility that charges them 78 percent more than its customers to the north.

That might change if freshman lawmaker Steve Braun gets his way. Braun’s bill, which would allow out-of-town municipal water and sewer customers to petition the Indiana Utility Regulatory Commission for rate relief, passed the Senate 40-10 on April 10. The bill earlier passed the House, 70-28.

“It’s really a taxation without representation, or rate paying without representation,” said Braun, a Republican representative from Zionsville.

Whitestown Town Manager Tom Combiths said the utility is not taking advantage of its out-of-town customers. The 700 homeowners of Royal Run do pay much more, but that higher rate also applies to about 1,000 customers who reside in the southern portion of Whitestown, he noted.

“This is kind of unprecedented to involve local water and sewer utilities operated by municipalities, to get them involved in the IURC,” Combiths said.

Whitestown historically had two systems: the north end that used well water and the south end that bought water from Indianapolis. Although all the water now comes from Citizens Energy Group, north-end users pay $23.94 for the first 2,000 gallons, while users on the south section pay $42.63 for the same amount. Basic sewage rates are $37.04 for both systems.

Monthly bills for water, sewage and hydrant fees in Royal Run and the south section of Whitestown often run $120 or more, residents say.

Many municipal-owned utilities serve areas outside their boundaries. They can raise rates without the IURC’s review, and it’s not unheard of for the difference between in-town and out-of-town rates to be 15 percent or more.

This also isn’t the first time the Legislature has intervened in the issue. Under a law passed in 2012, anytime a rate increase makes the difference greater than 15 percent, out-of-town customers can petition the IURC for review.

The 2012 law doesn’t apply to Whitestown because the current rates have been in effect for several years. Braun’s bill allows out-of-town customers who pay more than 50 percent than any in-town customer to petition the IURC.

Braun isn’t sure how many utilities have a difference of more than 50 percent, but he said, “This wasn’t just a Whitestown bill.”

Rhonda Cook, director of government affairs for the Indiana Association of Cities and Towns, said rate differences are generally fair. In many cases, they came about because a developer asked the city or town to extend water lines to a new subdivision in an unincorporated area.

“Developers ask to receive services, and they agree to pay a price,” Cook said.

Homeowners may get fed up with their rates, but they often resist annexation at the same time, Cook said. “It really becomes an unfairness to the people that live in the city or town because they’re having to subsidize the outside users.”

Royal Run is in a somewhat unique situation because it’s already part of Zionsville. The neighborhood originally was served by a private utility, Boone County Utilities LLC, which went bankrupt.

Whitestown bought the utility in 2004 for $10 million. The cost of that acquisition is one factor in the rates that apply to the so-called south system, Combiths said.

The Indiana Association of Cities and Towns managed to secure one amendment to Braun’s bill that may avert expensive legal fees and rate studies that go along with an IURC review. Disgruntled customers must take their case to the city or town before petitioning the IURC.

Combiths hopes the whole process will be unnecessary. The town is conducting a rate study and plans to erase the price gap between its north and south systems this year, he said.

McLaughlin covered business for daily newspapers in Massachusetts and Florida before joining IBJ in 2008. A native of the St. Louis area, she appreciates Indiana’s Midwestern hospitality. Given her beats, you may find her taking in art, chronicling the death of a factory town or touring suburban developments. McLaughlin graduated from the University of Missouri School of Journalism in 1998.

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